Health Net 2015 Annual Report Download - page 56

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It may be difficult for a third party to acquire us, which could decrease the value of your shares of our common
stock.
We are subject to the Delaware anti-takeover laws regulating corporate takeovers. These provisions may prohibit
stockholders owning 15% or more of our outstanding voting stock from merging or combining with us. In addition,
federal antitrust laws apply to us, and any change in control of our state health plans or health insurance companies also
would require the approvals of the applicable regulatory agencies in each state in which we operate.
In addition to the Rights Agreement, our certificate of incorporation and bylaws also contain provisions that
could have the effect of delaying, deferring, or preventing a change in control of the Company that our stockholders
may consider favorable or beneficial. These provisions could discourage proxy contests and make it more difficult for
our stockholders to elect directors and take other corporate actions. These provisions could also limit the price that
investors might be willing to pay for shares of our common stock.
The Merger Agreement also contains certain provisions that restrict our ability to initiate, solicit, knowingly
encourage or, subject to certain exceptions, engage in discussions or negotiations with respect to, or approve or
recommend, any third-party proposal for an alternative transaction.
Large-scale public health epidemics and/or terrorist activity could cause us to incur unexpected health care and
other costs and could materially and adversely affect our business, financial condition and results of operations.
An outbreak of a pandemic disease and/or future terrorist activities, including bio-terrorism, could materially and
adversely affect the U.S. economy in general and the health care industry specifically. Depending on the government's
actions and the responsiveness of public health agencies and insurance companies, a large-scale public health epidemic
or future acts of bio-terrorism could lead to, among other things, increased utilization of health care services and the
associated increased health care costs due to increased in-patient and out-patient hospital costs, disruption of
information and payment systems and the cost of any anti-viral or other medication used to treat affected people.
Disasters, including earthquakes, fires and floods, could severely damage or interrupt our systems and operations
and result in an adverse effect on our business, financial condition or results of operations.
Disasters such as fires, floods, earthquakes, tornados, power losses, virus outbreaks, telecommunications failures,
break-ins or similar events could severely damage or interrupt our systems and operations, result in loss of data, and/or
delay or impair our ability to service our members and providers. We have in place a disaster recovery plan that is
intended to provide us with the ability to recover our critical information technology systems in the event of a natural
disaster utilizing various alternate sites provided by a national disaster recovery vendor. We also have business
continuity plans that provide for the processes and resources necessary to operate during and following a disaster.
However, there can be no assurance that such adverse effects will not occur in the event of a disaster. Any such disaster
or similar event could have a material adverse effect on our business, financial condition and results of operations.
We also face other risks that could adversely affect our business, financial condition or results of operations, which
include:
• any requirement to restate financial results in the event of inappropriate application of accounting
principles;
• a significant failure of our internal control over financial reporting;
• our inability to convert to international financial reporting standards, if required;
• failure of our prevention and control systems related to employee compliance with internal policies,
including data security;
• provider fraud that is not prevented or detected and impacts our medical costs or those of self-insured
customers;
• failure to protect our proprietary information; and
• failure of our corporate governance policies or procedures.
Item 1B. Unresolved Staff Comments.
None.